Vukile HY HEPS up 34.8%

Vukile Property Fund, a JSE-listed retail real estate investment trust, has reported impressive financial results for the interim period ending 30 September, with a 35 per cent increase in headline earnings per share in both their South African and Spanish portfolios. Laurence Rapp, CEO of Vukile, attributes this growth to the positive performance in both markets despite challenging economic conditions. In South Africa, the company has seen a 5 per cent net operating income growth and low vacancy rates of 1.3 per cent, showcasing the resilience of their retail properties. Rapp also highlights the strong demand for space from retailers, with 86 per cent of leases reverting positively or flat. This indicates that tenants are keen on expanding within Vukile's portfolio, allowing the company to increase rentals and drive future growth. Vukile's footfall and traffic metrics have also shown positive growth, with trading densities and footfall up by around 3.5 per cent each. Rapp emphasizes that the company has been able to outperform pre-COVID levels, gaining market share in their catchment areas. Turning to Spain, Vukile continues to excel in this market despite concerns about high interest rates and a potential recession. The Spanish consumer market is robust, with high saving rates, decreasing debt levels, and declining unemployment. The company has achieved positive reversions of nearly 12 per cent on their portfolio in Spain, demonstrating the success of their consumer-focused strategy. Spain's strong tourism industry further boosts Vukile's performance, attracting high-spending visitors to the retail centers. With over half of its earnings and 60 per cent of its value coming from Spain, Vukile benefits from a strong rand hedge element, providing additional stability to its financial position. In terms of financing and cost management, Vukile has navigated challenges posed by increasing interest rates. The company's debt is hedged for over two years, providing visibility on their cost of debt in the near term. While there may be some cost increase on the Spanish side due to expiring hedges, Vukile remains confident in its conservative financial modeling and forecasting. Rapp anticipates a potential downturn in interest rates, which could further support the company's earnings and growth. Overall, Vukile's strong performance in both South Africa and Spain, coupled with effective financial management, positions the company for continued success in the real estate market.